EL PASO WATER CO v. CITY OF EL PASO

United States Supreme Court

EL PASO WATER CO v. CITY OF EL PASO, (1894)

No. 238

Argued: Decided: March 5, 1894

Statement by Mr. Justice BREWER:

This is an appeal from a decree of the circuit court of the United States for the western district of Texas, sustaining a demurrer to the plaintiff's original and amended bills, and dismissing the same. The facts as alleged in the bills are substantially these: By an ordinance passed May 7, 1881, the city council of the city of El Paso, Tex., assumed to grant 'the sole and exclusive right, warrant, and authority, for the period of fifteen years, to manufacture, sell, and furnish water to the inhabitants of the city of El Paso, to both public and private buildings, and for irrigation within the corporate limits of said city.' with 'the sole and exclusive right, warrant, and authority for said period to lay pipes, mains, and conductors underneath the streets, alleys, lanes, and squares in said city, for the purpose of conducting water,' and by a subsequent ordinance rented hydrants at a certain annual rent. By certain assignments and transfers, these rights became vested in the plaintiff, and, in reliance thereon, it expended a large sum of money, to wit, the sum of $150,000, in establishing its plant. The substance of these ordinances, the acts of the plaintiff, and subsequent dealings between it and the city, are stated at length in the bills; but the sum of the whole matter lies in the fact of the alleged exclusive right to supply water to the city for the term of 15
[152 U.S. 157, 158]
years, and to occupy the streets for the purpose of laying mains, etc.

The wrong complained of is the passage of two ordinances in 1889 and 1890, approved by a vote of the people, authorizing the issue of $25,000 and $75,000, respectively, of the bonds of the city, for the avowed and declared purpose on the part of the council of sinking artesian wells and constructing a system of waterworks, to be owned and operated by said council, for supplying water to said city and inhabitants, for all public and private purposes; and the relief prayed was that the city be enjoined from establishing, maintaining, or operating any waterworks within the limits of said city until the expiration of said period of 15 years, and from selling or negotiating any bonds or other securities for that purpose.

It is also alleged that if the bonds are issued the plaintiff will be compelled to pay taxes on its property for the interest on said bonds, and to provide a sinking fund for the principal thereof, but the amount of the tax which will be thereby cast upon the plaintiff's property is not disclosed.

M. McKeag and W. B. Thompson, for appellant.

Walter D. Davidge and Leigh Clark, for appellee.

Mr. Justice BREWER, after stating the facts in the foregoing language, delivered the opinion of the court.

Probably the circuit court sustained the demurrer on the ground that under the constitution of the state of Texas, adopted in 1876, the attempt to grant exclusive rights in these matters was beyond the power of the city, and that, among other matters, is discussed at length by counsel in their respective briefs. That constitution (article 1, 26) provides that 'perpetuities and monopolies are contrary to the genius of a free government, and shall never be allowed.' In the case of City of Brenham v. Brenham Waterworks Co., 67 Tex. 542, 4 S. W. 143, the supreme court of the state, construing this provision, held
[152 U.S. 157, 159]
that a contract similar to that made with the plaintiff was inhibited by the constitution, and that neither the city council nor the state legislature had power to make or authorize such a contract.

We do not deem it necessary to consider the important constitutional question thus presented, for it does not appear from the record that there is over $5,000 in controversy, as is necessary to give this court jurisdiction. The bill is filed by the plaintiff to protect its individual interests, and to prevent damage to itself. It must therefore affirmatively appear that the acts charged against the city, and sought to be enjoined, would result in its damage to an amount in excess of $5,000. So far as respects the matter of taxes which, by the issue of bonds, would be cast upon the property of the plaintiff, it is enough to say that the amount thereof is not stated, nor any facts given from which it can be fairly inferred.

With regard to the claim of exclusive rights, there is no allegation in the bills of the time at which the city will, unless restrained, commence the operation of its contemplated system of waterworks, and thus interfere with the actual performance of its contract with the plaintiff, so far as respects the supply of water. Every averment would be satisfied by proof that the city intended to begin the use of its proposed waterworks on the day before the expiration of the 15 years. And the only distinct disclosure of damage in the bills, or by the affidavits filed in this court, is that resulting from an actual supply of water by the city, and a failure to pay the plaintiff for the use of its hydrants. So far as the mere construction of waterworks is concerned, that of itself is no violation of the terms of this contract. The time for which the exclusive right, as claimed, was given, was 15 years, and the city would be guilty of no breach of any obligations if, during the life of the contract, it proceeded to sink artesian wells, to establish waterworks, and put itself in condition to, in the future, and after the termination of the 15 years, supply water for all public and private purposes. Suppose that, the very next day after the acceptance by the grantee of these franchises, the city had commenced the work of sinking
[152 U.S. 157, 160]
artesian wells and establishing a system of waterworks, and had continued its labors in that direction during the entire life of the contract. That would have been no breach of its obligations to the plaintiff. It might have affected pecuniarily the value of the plaintiff's plant, in that it carried a strong intimation that the moment the 15 years expired the city would itself engage in the work of supplying water, and thus take from the plaintiff its business. So, preparations made by the city, at the time stated in the bills, to wit, 1889 and 1890, for the establishment of waterworks, may, and doubtless did, have some effect upon the value of the plaintiff's property; but the extent of the diminution of value thus caused is not alleged, and cannot be inferred. The bills do not allege that the city, in terms, denies the validity of its agreement to pay rent for hydrants, or otherwise; and the acts which they charge that the city is about to do are acts which the city may do, consistently with the continuance of the contract, and as a mere matter of preparation for the discharge of a public duty after the termination of that contract. Under these circumstances, we are of the opinion that it is not affirmatively disclosed by the record that the amount in controversy is a sum in excess of $5,000, and therefore, for want of jurisdiction in this court, the appeal must be dismissed.